Ibovespa gains strength outside and closes higher after volatile session; dollar rises 1.3% by Fed and DIs fall with Copom minutes

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SÃO PAULO – Ibovespa gained strength from abroad at the end of the session and closed higher after a very volatile session. Outside, the Dow Jones, S&P 500 and Nasdaq indices advanced 0.52%, 1.05% and 1.71% respectively. The highlights were Amazon’s shares, which gained 5.1% after Bernstein’s purchase recommendation.

Also contributed to the optimism in the United States was the statement by the Federal Reserve President, Jerome Powell, that the American central bank will support the country’s economy for as long as necessary. He addressed the House of Representatives’ Financial Services Committee, the first of three days of testimony to Congress this week.

Here, the climate of risk aversion with concerns about the Treasury’s ability to honor fiscal commitments has limited the recovery after yesterday’s sharp decline.

The Ibovespa increased slightly by 0.31%, to 97,293 points with a financial volume of R $ 20.079 billion. On a day of high fluctuation, the index rose 0.7%, at the maximum, to 97,684 points and fell by 0.62%, at the minimum, to 96,390 points.

On the other hand, Chicago Federal Reserve Chairman Charles Evans brought strong buying pressure on the dollar by saying that US interest rates could rise before the average 2% inflation target is reached.

The commercial dollar rose 1.26% to R $ 5.4674 in the purchase and to R $ 5.4682 in the sale. The future dollar for October increased by 1.11%, to R $ 5.476 in the after-market.

In the future interest market, the main driver of the session was the release of the minutes of the Central Bank’s Monetary Policy Committee (Copom) this morning. In the document, Copom reiterated that, due to prudential and financial stability issues, the remaining space for cutting interest rates, if any, should be small.

According to XP Macro’s analysis, Copom’s minutes were neutral, largely repeating the previous communication. “In paragraph 16 the Committee eliminated the part where it discussed the limitation of forward guidance (FG) in emerging markets, reinforcing confidence in the mechanism ”, stressed the broker’s analysts. For XP, the focus from now on will be the risk of changes in the tax regime.

The DI for January 2022 fell six basis points to 2.91%, the DI for January 2023 lost four basis points to 4.35%, the DI for January 2025 fell two basis points to 6.30% and the DI for January 2027 varied negatively by a base point of 7.28%.

With the reinforcement of the more dovish (favorable to maintaining a loosened monetary policy to stimulate the economy) of the Copom minutes, the bets on interest rate hikes in the next meetings were emptied, causing an adjustment in the future interest curve.

The market was also attentive to President Jair Bolsonaro’s speech at the 75th edition of the United Nations General Assembly (UN). Bolsonaro defended the stance adopted by his government in tackling the new coronavirus pandemic and countered international criticisms of Brazilian environmental policy.

Also in the domestic scenario, it was reported that the reinforcement for Renda Brasil may come from cuts in the public sector. According to the State of S.Paulo, President Jair Bolsonaro has been advised by his team to review server costs or make the program conditional on the approval of new initiatives. Among them would be the creation of a new tax.

On the international radar, the advancement of coronavirus in Europe continued to be an issue. 300,000 cases were reported in the last week. The second wave of contamination in France, Spain, Germany and the United Kingdom could take the region back to lockdown, indicating that the continent is experiencing the most delicate phase of the epidemic since mid-May.

Agribusiness

The day before, President Jair Bolsonaro celebrated the expansion of the sugar quota that Brazil may export to the United States. However, according to Folha de S.Paulo, the quota increase was expected since April.

The sugar and alcohol sector did not celebrate the measure. In a note, the Sugarcane Industry Union (Única) stated that the measure has been customary and does not represent “any structural advance for greater access for Brazilian sugar to that country”, according to the State of S.Paulo.

In the national news, the information that Brazil is one of the countries that most feel Covid’s inflation also draws attention. According to Folha de S.Paulo, a study by Argentine economist Alberto Cavallo, a professor at Harvard University’s business school, compared inflation caused by the health crisis with the variation captured by consumer price indices.

Among 18 countries analyzed, Brazil showed the greatest disparity between Covid inflation and the IPCA. Brazil appears at the top of the list because it presented a combination between a strong rise in food prices (9% per year in May) and a drop in transport costs (2.5%).

Corporate Radar

In the corporate news, one of the highlights was Totvs ‘statement that Linx’s special independent committee has been working to delay, or even prevent, the analysis of Totvs’ proposal to unite companies, with the objective of favoring the proposal made by Stone. In addition, Ultrapar Participações and Cosan confirmed that they are disputing the purchase of the Presidente Getúlio Vargas Refinery from Petrobras, in Paraná.

Higher highs

Active% ChangePrice R$)
IRBR36.284665.75
MRVE33.7267116.7
CSNA33.3887916.78
CYRE32.7619523.44
SBSP32.417348.3

Higher casualties

Active% ChangePrice R$)
BTOW3-3.7970894.25
EMBR3-2.830196.18
SUZB3-2.3902747.37
JBSS3-2.1313622.5
CVCB3-1.9370516.2

Another highlight is the news that Petrobras should postpone the offer of the 37.5% still held by the oil company in BR Distribuidora until there is an improvement in the conditions of the capital market, according to Valor Econômico. At the same time, B2W approved a capital increase of R $ 4 billion, while B3 announced payment of dividends.

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